SOLUTION: The Human Relations Department of Smallville Co. would like to include a dental plan as part of its benefits package. The question is, how much does a typical employee and his/her

Question 478987: The Human Relations Department of Smallville Co. would like to include a dental plan as part of its benefits package. The question is, how much does a typical employee and his/her family spend on annual dental expenses? A sample of 45 employees reveals the mean amount spent last year was $1,820 with a standard deviation of $660. Assume a normal distribution of annual dental expenses.
A) Construct a 95% or .95 confidence interval estimate for the population mean.
B) The information from part A, above, was given to the President who indicated the Company could afford $1,700 per year. Is it possible the population mean could be $1,700? Justify your answer.

Answer by stanbon(75887) (Show Source): You can put this solution on YOUR website!
The Human Relations Department of Smallville Co. would like to include a dental plan as part of its benefits package. The question is, how much does a typical employee and his/her family spend on annual dental expenses?
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A sample of 45 employees reveals the mean amount spent last year was $1,820 with a standard deviation of $660. Assume a normal distribution of annual dental expenses.
A) Construct a 95% or .95 confidence interval estimate for the population mean.
ME = 1.96*660/sqrt(45) = 192.84
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95%CI: 1820-192.84 < u < 1820+192.84
1627.16 < u < 2012.84
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B) The information from part A, above, was given to the President who indicated the Company could afford $1,700 per year. Is it possible the population mean could be $1,700? Justify your answer.
We have 95% confidence the population mean is beween 1627.16 and 2012.84
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We might be wrong.
Cheers,
Stan H.

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